Key Legal Documents For Starting A Business

Starting a business sounds complicated for most people. In fact, in practice it can be done in a day, but there are a number of legal documents and hurdles small business owners should know about before they begin an endeavor. It’s important to get all your documents in order, paperwork filed and components registered when starting a business - if you fail to adequately research local laws, you could be liable for fines and charges for failing to properly register your business. Here are key legal documents and processes you should address when starting your small business.

Your assumed business name

First, you need a name to operate under. Pick a name that doesn’t violate existing trademarks. Remember, one thing to keep in mind is your business name doesn’t have to be the name you operate under. Most businesses have a DBA, or doing-business-as name, that they operate under and market under, and a separate name that they’re legally registered under. You must file the DBA in order to use it. After registering your business, don’t forget to register your DBA at the state and county level before using the names in your operation.

Forming a corporation

Business owners have to decide whether to form a sole proprietorship, which is tied directly and exclusively to them, or form a legal corporation, or a cheap LLC, that represents the business independently. The former is easier, cheaper and requires less paperwork, but the latter enables your company to exist separately from you, which means you won’t be personally liable for debt your company enters, you can sell the business to others and it doesn’t cease to exist when you die. If you plan on incorporating your business, make sure you select the right box when registering your business.

An employee identification number

If you want to hire any employees, you’re going to need a federal Employee Identification Number, which will also serve as your tax ID number. This number will be used to identify your business to the IRS so they can figure out how to tax your business and your employees on their end. Having one means you don’t have to use your personal social security number, which means it increases your personal security. It’s quick, easy and free to get a number online from the IRS, so don’t skip this step.

Business permits and licenses

In virtually all states and counties, you will need a business permit or license to operate your business. Make sure you do your research based on your municipality, because laws can vary by location. However, for the most part, municipalities will ask you to have a general business operating license to operate within a city.

There are also a number of federal and state licenses required to perform anything from manicures to construction work to architectural work. What licenses you need depends on the industry of your business. If you’re caught without the necessary permits your business could be shut down entirely - do your research into what permits you need to operate legally.

There are multiple steps involved in creating a business, which makes the process seem onerous and complicated. But it’s relatively straightforward, if tedious. If you’re unsure about what you need to do, talk to your local Small Business Administration representative to make sure you have everything in order before you start operating your business.